A few investors — unwillingly but luckily — managed to escape Portus Group’s stratagems, according to the most recent report filed by receiver KPMG.
Investors, with 30,000 accounts put $738 million CAN and $50 million US into Portus’s purchase of guaranteed notes, of which only $529 million CAN was invested, $133 million CAN and $36 million US have been recovered from Portus accounts. The remainder was used for sales commissions, management fees and working capital.
However, the receiver recently uncovered a cache of mail containing $375,000 in investor cheques that were never cashed. KPMG says that the cheques showed up last week: “Each cheque was in a Portus Group envelope…and there is no indication that the envelopes had been mailed.”
That’s some small solace to late investors. Other investor monies are up in the air, however. The receiver is still trying to recover $17 million US that Portus founder Boaz Manor was alleged to have diverted to buy diamonds and pay legal and accounting fees. In its most report, KPMG is demanding that Manor return $1.5 million that he allegedly misappropriated after Portus was put into receivership through a complicated scheme involving his wife, diamond merchants and his sister-in-law, a resident of Hong Kong.
Manor’s sister-in-law, Yu Jieying, received $1.2 million as a loan repayment from one of the Portus entities, Southview Capital, according to Portus’s books. In fact, she told KPMG she received a loan from Portus, 85% of which was investor money, which she repaid on instruction from Manor. The last payment was made as late as September 29, when Manor was reportedly unable to appear before the receiver, or Israeli courts, thanks to an incapacitating but undisclosed illness.
Yu was also responsible for collecting packages, which the receiver thinks are diamond purchases, and arranging for their pickup by unnamed recipients, at the behest of her sister, Manor’s wife. Yu told the receiver she doesn’t read or speak English. According to KPMG, Yu was the settlor of one of Portus’s offshore trusts. As settlor, she would have provided the $16 million to be administered by trustees on behalf of beneficiaries — Portus investors. KPMG has determined that Yu didn’t contribute the funds; investors did, and she told KPMG that while she signed the documents arranging for the transfer, she couldn’t read them.
KPMG has also asked the Ontario Superior Court of Justice to give it access to files at Groia & Company, Kroll Lindquist Avey and Risk Management Services, all of whom advised Portus at one point, in order to get a more complete picture of the financial flows at Portus.
Finally, KPMG has asked the court to appoint Ogilvy Renault to review the fees disbursed to it as receiver, which have so far amounted to $11 million.
Filed by Scot Blythe, Advisor.ca, firstname.lastname@example.org.